SB 267

This bill exempts, for state income tax purposes in 2020 and 2021, up to $10,200

of the unemployment compensation received by an individual during the year. In the

case of married couples who both receive unemployment compensation and who file

a joint return, the $10,200 limitation applies separately to each spouse. The

exemption applies only if the federal adjusted gross income (AGI) of the individual,

or of both spouses if filing a joint return, is less than $150,000.

Under current federal law, unemployment compensation is generally taxed,

except that the American Rescue Plan Act of 2021 temporarily allows individuals

whose federal AGI is less than $150,000 to exclude up to $10,200 of the

unemployment compensation received in 2020 by the individual or, in the case of

married couples filing a joint return, each spouse. Under current state law,

unemployment compensation is exempt from state tax if the recipient's federal AGI

does not exceed a base amount. The base amount is $12,000 for single individuals

or married individuals filing separate returns who live apart from their spouse for

the entire year, $18,000 for married couples filing joint returns, and zero for married

individuals filing separate returns who live with their spouse during the year. If

federal AGI exceeds the base amount, then the amount subject to tax under current

state law is the lesser of the amount of unemployment compensation received or

one-half of the amount that federal AGI exceeds the base amount. The bill

maintains the existing provision.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.